Part 1: Edwardsport: Our energy future?  [Printer-friendly version]
May 23, 2008

HEAD

PU Herald Times (Bloomington, Indiana)
DA May 23, 2008
PU Part 1: Edwardsport: Our energy future?
Duke sees plant as green response to energy needs; others raise
questions
Gasification, carbon storage processes templates for the future or
giant ratepayer pain?

By Mike Leonard 331-4368 leonard@heraldt.com

It didn't help the Duke Energy public relations campaign when the
company recently had to increase its projected cost for a massive new
coal gasification plant by 18 percent just six months after the
Indiana Utility Regulatory Commission approved its proposal for a
$1.99 billion facility.

The planned electrical generating plant at Edwardsport about 50 miles
southwest of Bloomington had already struck a sour chord among certain
consumers and environmentalists because it relies on coal,
historically one of the dirtiest and most polluting energy sources
available.

But it's not just coal or the potential for spiraling costs that
bothers opponents of the now $2.35 billion, 630 megawatt plant. While
the company acknowledges, excitedly, that the integrated gasification
combined cycle facility will be unique in its combination of size and
use of carbon sequestration technology, the untried and untested
overall design leaves some ratepayers and environmentalists worried.

Some environmental groups hail the Edwardsport effort because even if
carbon sequestration were to fail, the advanced gasification process
alone promises to remove a huge amount of dangerous mercury and sulfur
dioxide, deadly air pollutants produced by traditional coal-fired
generating plants. Clean Air Task Force representative John W.
Thompson describes the Duke carbon sequestration initiative as a
pioneering effort that could provide a template for other companies
and countries to ameliorate global warming by safely storing carbon
dioxide, a major byproduct of the burning of fossil fuels and the
greenhouse gas identified as the biggest culprit in the planet's
rising temperature.

The critics, including other environmentalists, take a gloomier view.
They wonder why Duke is making such a huge investment in coal, which
they view as a hopelessly flawed fuel. They wonder why the company
isn't instead building upon the science and technology base to create
cleaner and more sustainable alternative energy sources. And they
point out that while Duke is firm on building the gasification plant,
the company promises only to study the feasibility of carbon
sequestration. Duke is clear it will only employ sequestration if
studies show it is both financially and technologically sound.

Who pays?

A huge question yet to be answered is who takes the financial risk if
the plant costs continue to increase Duke Energy or its customers?
John Blair, president of the Evansville-based, environmental group,
Valley Watch, said Duke is clearly trying to pass all costs on to
customers. "The capital markets where they'd traditionally look to for
funding are really squeamish on energy right now. They're squeamish
about coal," he said. Indiana, Blair contended, has a weak regulatory
climate and a major cheerleader for coal in Gov. Mitch Daniels.

Plus, Blair contends Duke Energy and its supporters are exploiting
late-1970s legislation that allows a utility to pass on to ratepayers
the costs for environmentally friendly projects. The move was aimed to
give utilities the incentive to install scrubbers on coal stacks to
greatly reduce the dangerous particulate matter emitted from coal
combustion plants, he said.

"Now, they're trying to pass this entire power generation plant off as
an environmental project," Blair said. "I call it the socialization of
risk and the privatization of profit."

Duke Energy executive James L. Turner addressed the question of "Who
takes the risk?" in a meeting last week with The Herald-Times
editorial board: "That's the conversation we're going to have with the
(regulatory) commission in terms of how does the commission view the
cost increases we've updated them on.

"We have a lot of challenges ahead of us," Turner said, noting that
with or without Edwardsport one thing is certain. "Costs will go up.
If we are going to try to produce energy in a cleaner way than in the
past, it's going to cost more," he said.

"Customers have enjoyed a relative bargain on electricity for a very
long time," Turner continued. "We haven't built new large base load
facilities for a very long time."

Planning for future needs

Base load is the average amount of electricity a utility puts out to
meet the needs of its commercial and residential customers. Peak
demand often is cited in energy generation conversations and refers to
the spikes in electrical usage at times such as during a summer heat
wave, when energy-demanding air conditioners running constantly can
test a utility's energy-generating capacity.

Duke currently has the capacity to meet its Indiana base load entirely
through coal plants, and projected peak demand can be met through
small, gas turbine "peaking stations" around the state that are
switched on when needed. Coal plants account for 95-98 percent of Duke
Indiana's energy sales. Duke also has surplus generating capacity in
Indiana for now.

The state energy department's strategic plan titled "Hoosier Homegrown
Energy" forecasts a need for an additional 10,600 megawatts of
generating capacity in the next 15 years to meet Indiana's power
requirements.

Penalties loom

New federal regulations to regulate the polluting greenhouse gases
produced by coal and fossil fuels are virtually certain to be
promulgated in the near future. Most observers of energy policy
believe that the Lieberman-Warner Climate Security Act currently
before Congress is a good working model for the type of greenhouse gas
regulations to come. The bill imposes financial penalties on emission
levels above certain thresholds.

Presidential candidates Barack Obama, Hillary Rodham Clinton and John
McCain all are on record as well, supporting similar measures that
will penalize with the goal of curtailing the level of carbon dioxide,
sulfur dioxide, mercury emissions and other pollutants that come with
coal-fired generation plants.

Other informed sources also view carbon penalties and negative
financial consequences as inevitable.

"Due to the state's heavy reliance on coal as a fuel source for
electricity generation, Indiana is expected to experience larger price
increases than those projected on a national level," reads a February
report from the State Utility Forecasting Group at Purdue University.
"Similar studies by other entities have shown projected national
electricity price increases of 15 to 25 percent in 2025, while this
study projects a 45 percent increase (averaged across all sectors) for
Indiana."

Duke's Turner said the historical increase in energy demand, the aging
of the company's power-generation plants and anticipated carbon
penalties on coal plants have all combined to motivate the company to
get moving on plans for a new power plant. "We've got to plan 10, 15
and 20 years out for a variety of reasons," he said. "Our thought is,
what's clean, efficient, reliable. We spend a huge amount of time
trying to figure out that balance and the best mix of resources to do
those things.

"There are tradeoffs in trying to find that balance," he continued.
"You can produce electricity that is cheap but not very clean. You can
build electricity that is reliable but not very affordable. And you
can build facilities that are very, very clean but they're neither
very affordable nor very reliable."

New technology, old fuel

Coal is an energy source that is relatively close-by, abundant and
cheap, although prices have almost doubled in just the past year, from
$25 to $50 a ton for what Blair describes as "high sulfur, decent
BTU"coal. What Duke proposes to do with its Edwardsport plant is to
use those coal resources by combining old and new technologies to
produce energy that is vastly cleaner than traditional coal-burning
plants, which produce high levels of toxins such as mercury and which
release unacceptable amounts of still-unregulated greenhouse gases
into the atmosphere.

The gasification plant would convert coal into a gas, removing most of
the toxins and particulate matter, then burn the cleaned-up gas in a
combustion turbine generator to produce electricity. Heat from both
the gasification chamber and the combustion turbine also would be used
to generate additional power by means of a steam generator. If
technological and geological models prove to be viable, the company
then hopes to capture and store deep underground about 20 percent of
the carbon dioxide produced by burning the gas.

While none of the technologies used in gasification and carbon
sequestration are new, the combination and scale proposed at
Edwardsport is. Duke has previous experience with coal gasification
from its partnership in a 292-megawatt Wabash River Station in West
Terre Haute. That project, while deemed successful, experienced
significant downtime due to gasifier problems and criticism over
pollutants found in its water discharge. Duke sold its interest in the
plant to the Wabash Valley Power Association in 2006.

The 630-megawatt IGCC plant being planned is more than four times
larger than the traditional 160-megawatt plant that opened at
Edwardsport in 1948.

Carbon storage is key

The real wild card at play, however, is the "carbon capture and
sequestration" process by which a portion of the carbon dioxide
created by the gasification of the coal is captured and not vented
into the atmosphere.

Duke has asked the utility regulatory commission for permission to
pass on to consumers the ongoing research with a price tag of $16
million to $18 million it will conduct to decide if the plan will
achieve the most reliable and efficient capture and sequestration
technology. Essentially, it plans to force the concentrated carbon
dioxide it diverts from the energy generation process more than a mile
below the earth's surface. There, it can be absorbed into the rock and
sequestered indefinitely in theory.

The current goal to remove about 18 percent of carbon dioxide
emissions through "capture and sequestration" excites people such as
Thompson of the Clean Air Task Force. He maintains that the
sequestration amount can conceivably go much higher, although he and
Duke's Turner acknowledge that currently, it appears that the higher
the sequestration level, the less efficient and more expensive
Edwardsport electricity will be.

The removal through gasification of large amounts of mercury causes
John Goss of the Indiana Wildlife Federation to back the project as
well. Currently, he said, fish caught in Hoosier waterways are so
tainted by mercury that very few can be safely consumed.

If carbon sequestering proves unworkable, the expected penalties on
carbon emissions will make the so-called "clean-coal" facility less
clean and subject to financial or power generation constraints. Still,
Turner maintains, his company's proposed Edwardsport facility "looks
like a game changer."

"If we can demonstrate we have the ability to capture and sequester
significant amounts of CO2, the plant has the ability to be more of an
example to the rest of the nation and the world," he said. "It's a
huge foot in the door to try to meaningfully address CO2 and still
leave coal in the mix."

=========================================================
From: Herald Times (Boonmington, Indiana)
May 24, 2008

Part two: Edwardsport: Bold technology or risky venture?

Critics: Sequestered carbon could be deadly in earthquake

By Mike Leonard 331-4368 leonard@heraldt.com

Proponents of Duke Energy's proposed $2.35 billion coal gasification
plant at Edwardsport say the plan will help the electric utility meet
predicted future energy needs and spark construction of a new
generation of clean coal plants that will produce less of the
greenhouse gases that contribute to global warming.

Opponents liken the proposal to putting lipstick on a pig. They say
the plant's costs are too high, it will produce more pollution than
the generating plant it will replace and its design is unproven and
potentially dangerous. On top of all of that, opponents argue, the
giant energy company is trying to convince regulators to pass the
costs of construction and operation onto consumers while guaranteeing
itself a profit margin of about 12 percent.

"I will never understand how coal is the answer to global warming,"
environmental activist John Blair said last week. "Placing
two-and-three-billion-dollar bets on technology that doesn'nt exist is
arrogant if nothing else when it comes to ratepayers.... Coal, whether
it's burning it or mining it, is basically an act of desperation
except for those people who stand to make lots of money off of it."

Blair is president of Valley Watch, an Evansville-based environmental
advocacy group that has focused on the use of coal to generate
electrical power for more than 25 years. A Pulitzer Prize-winning
photographer, he is considered by many environmental and conservation
groups to be a leading national authority on coal.

A lot of power and pollution

There's a reason why the 61-year-old activist has focused on coal.
"Within 100 kilometers of Evansville is more than 15,000 megawatts of
electrical generation capacity, which is more than many entire
industrial states have. And we are sick because of it," he said.
Virtually all of that generating capacity comes from coal, and the
proposed Edwardsport plant would increase that location's output from
its current maximum output of 160 megawatts to 630 megawatts.

About 20 plants are clustered in the area, a geological region called
the Illinois Basin that stretches across a broad swath of southern
Indiana and Illinois and northern Kentucky. The plants in the region
include three (Gibson, Rockport and Petersburg) of the nation's
biggest carbon dioxide polluters. Gibson, also a Duke Energy plant,
generates roughly 3,340 megawatts of electricity annually and is the
third largest coal-fired plant in the world.

Adding to the list of concerns is that all of these plants are
evaluated individually by state and federal regulators and no one
takes into consideration the aggregate pollution the power generating
facilities vent into the atmosphere.

Blair said a study by the Partnership for Healthcare Information
showed that children in Vanderburgh County (Evansville) at ages 9-13
are five times more likely to be diagnosed with asthma than children
in cities with similar demographics, such as Fort Wayne. Preliminary
studies on the incidence of autism in the Evansville area show that
the neurological disorder is "through the ceiling" in the region,
Blair said. Research in California and Texas also has linked air
pollution and mercury one of coal combustion's most dangerous
polluting byproducts but one that Duke says will be greatly reduced at
the new plant with autism.

Various studies across the country attribute a broad spectrum of
illnesses to coal mining, transportation and combustion. "I was a
supporter of clean coal for 20 years and the coal companies weren't
Blair said. "When it became apparent that the world had passed them
by, they became proponents. But the truth is that clean coal is a
myth, both from a technological and economic standpoint."

Duke says new approach needed

Duke Energy and its supporters disagree sharply. Duke Energy executive
James L. Turner recently met with The Herald-Times's editorial board
flanked by two representatives of environmental groups: John W.
Thompson from the Clean Air Task Force and John Goss, who is currently
executive director of the Indiana Wildlife Federation. Goss is also a
former Bloomington deputy mayor and utilities department head as well
as past director of the Indiana Department of Natural Resources.

"This is a global environmental project," said Thompson, who said he's
spent most of his adult life fighting utilities and coal companies.
"The day this plant goes online in 2012, 500 or so conventional coal
plants around this country will become obsolete because the emission
rate is so low.... We're into this plant not because we love coal....
We're just interested in clean air and clean water."

Goss said the wildlife federation backs the Edwardsport project
because it will dramatically reduce mercury emissions that have caused
health officials to recommend limited consumption of fish caught in
Indiana waters.

Blair challenges the sincerity of the Clean Air Task "Farce" (as he
calls the group) and the Wildlife Federation and suggests that the
large grants the groups get from the wealthy Joyce Foundation might be
clouding their judgment. For better or worse, the Chicago-based
foundation has embraced coal gasification and explorations into
gasification technology and not only donated to groups advocating
"clean coal" but holds investments in energy companies with large coal
components.

Thompson from the Clean Energy Task Force argues that even without
"capture and sequestration" component of Duke's Edwardsport plan, its
fundamental coal gasification design will produce four times more
electricity than the current plant and less sulfur dioxide (a
greenhouse gas) in one year than the existing plant emits in a month.

Still, it's the lure of capture and sequestration of carbon dioxide
that has everyone involved with national and global energy production
looking at the Edwardsport plans. The concept involves capturing the
carbon dioxide in the generation process, condensing it under pressure
and then injecting it into porous rock and depleted oil and gas
caverns a mile or more underground.

Thompson said the technology holds the promise of drawing off as much
as 90-95 percent of carbon dioxide in energy production and being able
to store it for 125 years. Duke's Turner said that because capture and
sequestration reduces the efficiency of power generation, his company
is targeting 18 percent as a viable number if a final study replicates
projections the company already has made.

But even Duke spokeswoman Angeline Protogere acknowledges that "it's
the carbon sequestration, or storage, part, that has not been explored
at a power plant, although there are various studies under way,
including one at a Duke Energy power plant in Ohio."

And as much as environmentalists would love to see a technology
capable of reducing the amount of carbon dioxide into the atmosphere,
they warn that sequestration might be as fraught problems as
potentially catastrophic as the worst scenarios of storing nuclear
waste.

Quakes and suffocation

Nancy LaPlaca of Bardwell Consulting in Denver said Hoosiers should
think long and hard about going down the sequestration road. "In the
1960s, they injected liquid waste under the Rocky Mountains, and
between 1962 and '67 we had 1,500 seismic events and three above
magnitude 5 on the Richter scale," she said in a recent phone
interview. "The geologists said, hey, all of this coincides with the
sequestration program and when they stopped, the seismic events
stopped."

Another frightening scenario comes from West Africa, where in 1986, a
mysterious event killed 1,700 people and 1,100 head of cattle.
Investigators ultimately found that concentrated carbon dioxide
trapped in an underground volcanic crater vented naturally, and the
heavier-than-air gas settled on a village, displacing oxygen and
suffocating every living creature.

The epicenter of Indiana's April earthquake with a magnitude of 5.2
was just 34 miles from Edwardsport and is believed to have involved
the Wabash fault system, a northern branch of the New Madrid fault
system. New Madrid spawned the infamous New Madrid earthquakes of
1811-12. With some quakes approaching 8.0 on the Richter scale, they
constituted some of the most dramatic seismic events ever in the
contiguous United States. The worst created liquefaction of soil,
changed the course of the Mississippi River and reportedly rang church
bells as far away as Boston.

"Sequestration, at best, is only going to divert a very small amount
of CO2," LaPlaca said. "So if it leaks, if it explodes, if it causes
earthquakes, who's liable? Is it really worth the risk?" she asked.

Rewards or penalties?

Thompson, the Clean Energy Task Force representative, believes it is.
"We have to go to the Indiana Legislature to say these guys (Duke
Energy) need a liability shield," he said recently. "They can vent and
release into the atmosphere and there is no liability. But as soon as
they inject these gases underground, their lawyers tell them, "Hey,
this is new and different. Don't you think we need to worry about
liability?"

"There are pioneer's penalties associated with being the first on
technological development, and we need to turn those pioneer's
penalties into early adopter's rewards," Thompson said. He described
Duke's Edwardsport project as "the Kitty Hawk of carbon storage and
sequestration."

Detractors such as LaPlaca argue that while dramatic reduction of
greenhouse gases is necessary, coal and carbon sequestration are the
wrong way to go. "Everyone's talking about climate change and everyone
is changing their light bulbs while they're still building coal
plants. We are at the apex of human stupidity," she said.